AP News

Heckmann to acquire Power Fuels in $381M deal

PITTSBURGH (AP) — Heckmann Corp.'s shares soared Tuesday after the water management company announced that it is acquiring Power Fuels, a privately held North Dakota company, in a roughly $381 million deal that will increase its foothold in the fracking market.

The Pittsburgh-based company's shares rose 26 percent on the news.

Heckmann provides energy companies with water for fracking, otherwise known as hydraulic fracturing. In this process, companies inject a pressurized mixture of water, sand and chemicals into the earth to fracture shale formations to access oil and gas. Heckmann also treats the wastewater generated during the process.

The practice has helped increase access to natural gas and oil but is under scrutiny for its environmental impact.

The deal will double Heckmann's revenue, expand its customer base and "immediately and materially" increase its earning per share, according to the company. It expands Heckmann's operations to the oil-rich Bakken shale region where Power Fuels focuses its work.

Under the terms of the deal, Heckmann will pay $125 million in cash for Power Fuels and offer 95 million shares, which are worth about $256 million as of Friday. It also will assume about $150 million in debt. The deal is expected to close in in the fourth quarter, according to the company.

Richard Heckmann, chairman and CEO of Heckmann Corp., will become executive chairman of the board of the combined company. Power Fuels founder Mark Johnsrud will become CEO of the combined company and serve on its board as vice chairman.

The company also said that Jay Parkinson will serve as the executive vice president and chief financial officer. Parkinson previously worked at Jefferies & Company Inc. as a managing director of its Energy Investment Banking group.

Shares of Heckmann increased 71 cents, or 26 percent, to $3.40 by early Tuesday afternoon. Its shares have traded between $2.60 and $7.05 in the past 52 weeks.

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